Many Americans hope to save more. But saving can feel impossible if you have minimal extra cash left in the bank after paying your bills. Even if you only have $50 a month to save, it can make a difference and improve your future. Don't let your current financial situation keep you from saving at all. Here are two options to consider if you want to save $50 each month.
Start building an emergency fund
Costly life events can happen when you least expect them. Suddenly, out of the blue, you may need to pay for car repairs or an emergency vet bill. But the good news is you can prepare for unplanned expenses with an emergency fund. You may think it's not worth it to start saving if you can only afford to set aside $50 monthly. But that's not true.
Give yourself grace, and remember that we all start somewhere. It's okay to start with $50. If you set aside $50 a month for one year, you'll have $600 saved. That's better than $0. As you continue to contribute more money, your account balance will grow.
By keeping your extra cash in a high-yield savings account, you can earn interest while your money sits in the bank. Many of the best high-yield savings accounts offer APYs of 4.5% or more. How much interest can you earn while your cash sits in the bank?
If you keep $600 in a high-yield savings account with a 4.5% APY for one year, you'll earn around $27, depending on how frequently the interest is compounded. That's much better than making $0 in interest by keeping it stashed in your checking account or under your mattress.
Begin investing for long-term growth
Investing is another way to put $50 a month to good use. It's important to know there's no guaranteed return when investing your money. Your returns can fluctuate significantly over the years, so you should feel comfortable taking risks.
Historical data shows that investing can be beneficial to your financial future. Over the last 30 years, the stock market has had an average annual return of around 10%, as measured by the S&P 500. If you already have an emergency fund established, you may want to consider starting to invest -- especially if you're looking for a long-term growth strategy.
If you want to invest, consider opening a traditional IRA account. With this type of account, your contributions may be tax deductible. Plus, your earnings aren't taxed until you take a distribution. You can open a traditional IRA with a brokerage firm.
How much could your money grow? Let's imagine you decide to invest $50 per month for the next 30 years. Here's a look at the potential account growth after 10, 20, and 30 years with an 8.5% annual rate of return using the compound interest calculator from Investor.gov.
| Time Invested | Total Money Invested | Estimated Total Balance |
|---|
| 10 years | $6,000 | $8,901.06 |
| 20 years | $12,000 | $29.026.21 |
| 30 years | $18,000 | $74,528.84 |
Data source: Author's calculations using Investor.gov.
Don't wait to begin saving
If you've been meaning to work on your savings goals, now is the perfect time to begin. It's worthwhile to start, even if you can only afford to save $50 per month. Whether you choose to start building an emergency fund or focus on long-term growth by investing for your later years, your future self will be glad that you made your personal finances a priority.
These savings accounts are FDIC insured and could earn you 11x your bank
Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts could earn you 11x the national average savings account rate. Click here to uncover the best-in-class accounts that landed a spot on our short list of the best savings accounts for 2024.
FAQs
You can put $50 monthly into a high-yield savings account and earn interest as you build your emergency fund. Another choice is to contribute to a tax-advantaged account, like a traditional IRA, which could be ideal if you want to focus on long-term growth.
Is saving $50 a month good? ›
You might assume that to amass a nice amount of wealth, you need to invest a ton of money. But clearly, a $50 monthly commitment could do a lot of great things for your finances. And if you're able to invest beyond that point, even better.
What is a realistic amount to save per month? ›
At least 20% of your income should go towards savings. Meanwhile, another 50% (maximum) should go toward necessities, while 30% goes toward discretionary items. This is called the 50/30/20 rule of thumb, and it provides a quick and easy way for you to budget your money.
How much is $50 a month for a year? ›
$50 monthly is how much per year? If you make $50 per month, your Yearly salary would be $600.
How much is $50 a week for 30 years? ›
This chart shows you how, over a period of 30 years, investing $50 every week could grow your portfolio to more than $1 million. Chart by author. Assuming a 15% annual growth rate (on average), a $50 per-week investment could grow to a value of more than $1.5 million after 30 years.
How much should a 30-year-old have saved? ›
Fidelity Investments recommends saving 1x your salary by 30. At the end of 2021, the average annual salary was $49,920 for 25 to 34-year-olds and $58,604 for 35 to 44-year-olds. So the average 30-year-old should have $50,000 to $60,000 saved by Fidelity's standards.
Is $500 a month enough saving? ›
Investing $500 a month could make you a millionaire in 30 or 40 years. You don't need to be a financial expert, but understanding how to build a balanced portfolio will go a long way.
How much should a 22 year old have saved? ›
Aim to have three to six months' worth of expenses set aside. To figure out how much you should have saved for emergencies, simply multiply the amount of money you spend each month on expenses by either three or six months to get your target goal amount.
Is $600 a month enough to save? ›
But when it comes to what they need to be saving, it depends. So, if we're starting with a 30-year-old, they should be probably saving close to $580, $600, at least, a month. And that's if they're going to earn a high rate of return. So it depends on how aggressive and risky that they're looking to be.
How much do I need to save a month to get $10000? ›
To reach $10,000 in one year, you'll need to save $833.33 each month. To break it down even further, you'll need to save $192.31 each week or $27.40 every day. These smaller chunks are much more realistic and simple to comprehend, making it easier to track your progress.
$50 an hour is how much a month? If you make $50 an hour, your monthly salary would be $8,666.67.
What is $200 a month annually? ›
$200 monthly is how much per year? If you make $200 per month, your Yearly salary would be $2,400. This result is obtained by multiplying your base salary by the amount of hours, week, and months you work in a year, assuming you work 40 hours a week.
How much is $50 a week saved for a year? ›
If you invest $50 every week, that's the equivalent of setting aside $2,600 per year. And if you do that over the course of 30 years, then you will have contributed $78,000. But the real power is in the compounding, and the continued growth of your portfolio each year. You don't need to swing for the fences, either.
What happens if you save $100 dollars a month for 40 years? ›
According to Ramsey's tweet, investing $100 per month for 40 years gives you an account value of $1,176,000. Ramsey's assumptions include a 12% annual rate of return, which some critics have labeled as optimistic given that the long-term average annual return of the S&P 500 index is closer to 10%.
How much will I have if I save $100 a week for a year? ›
The first thing we need to know is how much $100 per week works out to on an annualized basis. There are 52 weeks in a year. That means that, after a full year of saving, $100 per week adds up to $5,200.
Is saving $600 a month good? ›
But when it comes to what they need to be saving, it depends. So, if we're starting with a 30-year-old, they should be probably saving close to $580, $600, at least, a month. And that's if they're going to earn a high rate of return. So it depends on how aggressive and risky that they're looking to be.
What if you save $100 dollars a month? ›
Your Retirement Savings If You Save $100 a Month in a 401(k)
If you're age 25 and have 40 years to save until retirement, depositing $100 a month into a savings account earning the current average U.S. interest rate of 0.42% APY would get you to just $52,367 in retirement savings — not great.
What is the 50 rule for savings? ›
The 50/30/20 budget rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should be split between savings and debt repayment (20%) and everything else that you might want (30%).
What happens when you save $100 dollars a month? ›
If you save $100 monthly for an entire year, you'll have $1,200 in the bank. But if you keep your savings in a savings account, you'll also earn interest. After one year of keeping $1,200 in a high-yield savings account with a 4.5% APY, you'll earn $54 in interest.
